South Korea aims to further strengthen its position in the global AI and semiconductor industry with a major investment program. Samsung Electronics and SK Hynix are each building two new chip factories. The project is part of a national program worth the equivalent of over 518 billion dollars.
Surprisingly, investors reacted cautiously. Both stocks lost ground on Monday, according to CNBC. President Lee Jae Myung presented the plans as a necessary step to secure South Korea’s technological lead. According to him, countries that master the AI technology of the future will also set the tone economically and strategically. That is why the government wants to accelerate the expansion of production capacity for advanced chips. At the same time, it aims to significantly strengthen the national AI infrastructure.
Samsung Electronics and SK Hynix will play a central role in this effort. Both companies are building two new semiconductor factories in southwestern South Korea. The projects are part of a national semiconductor program for which approximately 800 trillion won—equivalent to about 518 billion dollars—has been allocated. With this funding, the government aims to stimulate the development of new high-tech clusters outside the Seoul region.
The government also promises to move quickly. Minister of Trade, Industry, and Energy Jung-Kwan Kim announced that permitting processes will be significantly shortened so that new factories can begin production more quickly.
Broad AI strategy
The government’s plans follow earlier reports by the South Korean business newspaper Maeil Business Newspaper that Samsung is working on a ten-year investment program. This program would involve not only the construction of new chip factories but also AI data centers and facilities for advanced chip packaging. According to the newspaper, Samsung is also exploring whether previously planned expansions of production capacity can be accelerated to meet the rapidly growing demand for AI hardware.
These investments align with the global growth of AI infrastructure. Cloud providers and hyperscalers are investing billions in new AI capacity, causing demand for HBM (High Bandwidth Memory) to remain higher than the available supply.
SK Hynix is currently benefiting the most from this as the leading supplier of advanced HBM chips to Nvidia. Samsung, on the other hand, has been trying to narrow that lead in recent years through additional investments in memory technology and production capacity.
Despite these ambitious plans, the stock market reacted cautiously. Samsung Electronics shares fell 4.8 percent on Monday, while SK Hynix, after an earlier drop of nearly 6 percent, ultimately closed 1.6 percent lower. For now, investors appear to be weighing the substantial investments against the high costs and long payback period of the new factories.